FirstFT: ‘Japan has not overcome deflation’, finance minister warns

Good morning. We begin with an interview with Japan’s finance minister, who warned that the nation has not but conquered deflation. Additionally in at present’s publication:

• A shocking safety breach within the US

• The brand new nuclear arms race

• Why Singapore’s luxurious automotive gross sales have nosedived

Japan has not but overwhelmed deflation regardless of years of persistently rising shopper costs and the most important spherical of annual wage will increase in three a long time, the nation’s finance minister has warned.

Katsunobu Kato’s blunt evaluation in an interview with the FT comes 15 months into the Financial institution of Japan’s efforts to “normalise” the financial system and steadily reintroduce optimistic rates of interest, after a quarter-century-long battle to steer the nation away from falling costs.

Kato acknowledged that Japan was experiencing rising costs and that different tendencies appeared optimistic, however stated the federal government may solely declare victory over deflation when it noticed no prospect of sliding again.

“I believe we need to judge carefully whether Japan has broken away from deflation by not only looking at the consumer prices, but looking at underlying prices and background in a comprehensive fashion . . . It is our judgment at present that Japan has not overcome deflation,” Kato stated.

The minister’s feedback echo some economists’ fears that, whereas costs are rising, they largely signify the “wrong” sort of inflation: pushed by a weak yen and excessive commodity prices fairly than a virtuous cycle of rising wages and shopper demand. Learn the complete interview.

Right here’s what else we’re holding tabs on at present:

• Financial knowledge: Japan stories February gross sales at division retailer and Taiwan publishes industrial output for the month.

• Boao Discussion board for Asia: The annual convention, dubbed the “Asian Davos”, opens on China’s southern island of Hainan.

• HSBC International Funding Summit: The 2-day occasion, hosted by the financial institution’s chair Mark Tucker, begins in Hong Kong.

• Australia funds announcement: Treasurer Jim Chalmers presents the annual federal fiscal assertion to parliament.

5 extra prime tales

1. High US officers by accident shared categorised particulars about final week’s navy strikes on Yemen with a journalist in an unofficial messaging group, in a beautiful breach of safety that triggered uproar in Washington. The vice-president and defence secretary have been among the many members of a Sign chat group that mentioned operational particulars of the assault.

2. China is contemplating together with companies in a multibillion-dollar subsidy programme to stimulate consumption, in keeping with officers and lecturers. The potential assist for journey, tourism and sports activities would come along with an present “trade-in” programme for items similar to cellphones or vehicles. Right here’s extra on Beijing’s efforts to spice up weak home demand.

3. Israel’s navy has drawn up plans to reoccupy Gaza in a bid to lastly defeat Hamas. The brand new navy management, with the unofficial backing of Israeli far-right ministers, has formulated an excessive proposal to combat the militant group, stated a number of individuals briefed on the plans.

4. BYD’s annual gross sales have topped $100bn for the primary time, as China’s electrical automobile champion dominates its home market and presses forward with abroad growth. In contrast to its US rival Tesla, which solely sells absolutely electrical autos and reported income of $98bn final yr, BYD has benefited from resurgent demand in China for hybrids. The outcomes cap a outstanding 12 months for the Chinese language group.

5. Indonesia has named investor Ray Dalio and economist Jeffrey Sachs as advisers to its new sovereign wealth fund Danantara. The appointments come amid rising investor issues over governance on the fund, which is anticipated to handle state belongings price about $900bn. 

Information in-depth

Donald Trump’s pivot to Moscow and scathing disregard for Nato has prompted previous allies — from Berlin and Warsaw to Seoul and Tokyo — to confront what was as soon as unthinkable: put together for a withdrawal of their US nuclear defend.

We’re additionally studying . . . 

• Weight-loss medication: Ozempic and Wegovy might imply huge positive aspects for drugmakers however they might additionally upend the insurance coverage sector, writes Patrick Jenkins.

• AI chips: Malaysia is coming underneath US stress to stem the illicit move of high-end chips from California-based Nvidia to China, the nation’s commerce minister advised the FT.

• US exceptionalism: Its finish has lengthy predated Trump, and can proceed to play out for a very long time, writes Ruchir Sharma.

Chart of the day

Luxurious automotive gross sales in Singapore have plummeted as consumers shun shows of wealth after the federal government raised taxes on the autos and stepped up due diligence checks in response to a $2bn money-laundering scandal.

Take a break from the information . . . 

The upheaval of Covid lockdowns prompted a rethink not simply of the place we work however when and why. FT writers and contributors assess what’s completely different 5 years on.